3i stated that it was drawn to Sulake by its "innovative approach to building online social communities for teenages" at the time of investment, reports BBC News.

3i's withdrawal follows yesterday's (June 13) news that Balderton, another venture capitalist firm, has also dropped its stake following the allegations, as well as retailers Tesco and WH Smith having immediately pulled Habbo Hotel gift cards from sale in stores.

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Writing on the Sulake blog, CEO Paul LaFontaine explained that immediate measures were being taken to review policy: "My employees and the senior management are working closely to ensure that best-in-class moderation and detection systems are in place to create a safer and improved experience for our many responsible users.

"As a responsible business, the senior leadership of Sulake has agreed that our review of safety measures cannot be hurried."

Yesterday (June 13) live chat on the site was disabled, and users have since taken to the Habbo public spaces to show their support for the service by equipping their avatars with candles and torches.

"The many rooms filled with silent Habbos holding candles has been a source of inspiration at a challenging time and has reaffirmed our commitment to delivering a safe and positive user experience into the future," LaFontaine continues. "All of our loyal and silent Habbos will receive a badge to recognise their commitment through this period."

Channel 4's investigation exposed widespread sexual and pornographic chat on Habbo Hotel and highlighted what was referred to as "shocking lapses in moderation".

The revelations follow previous reports that paedophiles were using the service to 'groom' their victims.